FDIC Seeks Outside Counsel for Operation Choke Point Suit

Nov 28, 2018 | News

Jelena McWilliams, chairman of the Federal Deposit Insurance Corporation (FDIC), announced earlier this month that the FDIC would hire outside legal counsel to review actions taken by the agency during Operation Choke Point.

Chairman McWilliams made the announcement in a letter addressed to Congressman Blaine Luetkemeyer, who has called on McWilliams to investigate the allegations made under Operation Choke Point.

In an October 15 letter to McWilliams, Rep. Luetkemeyer asked the FDIC chair to look into Operation Choke Point. “Licensed, legally-operating U.S. businesses have lost access to the financial services space and been forced to close their doors,” said Luetkemeyer. “I ask you to … investigate this matter and take immediate and firm action against those who have so blatantly abused the power invested in them.”

About a month later, McWilliams sent a letter to Rep. Luetkemeyer, assuring him that the FDIC would not only investigate the agency’s prior actions but would hire outside counsel to investigate as well.

“I am troubled that certain FDIC employees acted in a manner inconsistent with FDIC policies in what has been generically described as ‘Operation Choke Point,’” said McWilliams. “To ensure that the FDIC’s commitment to integrity remains unequivocally clear, I am asking an outside law firm to review the prior actions taken by the FDIC in this matter so that I can better ascertain the effectiveness of our response.”

McWilliams also stated that she has limited the “ability of any FDIC personnel to recommend the termination of account relationships, including requirements that any such recommendations be made in writing, that Regional Directors review such recommendations, and that all such recommendations are reported to the FDIC Board of Directors and Division Directors.”

In response to the latest letter from McWilliams, Rep. Luetkemeyer issued a statement saying, “I have lead the charge against Operation Choke Point for the last five years, and I’m happy see the regulators’ willingness to ensure regulation is never again borne of personal biases or political motivations.”

In an ongoing lawsuit over Operation Choke Point, the Community Financial Services Association of America (CFSA) et al. v. the FDIC et al., both parties have submitted summary judgments seeking quick wins for their respective sides. Unfortunately for both parties, the lawsuit that was originally filed in 2014 will likely continue making headlines in 2019 if not even later.

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